Coffee With: Martin Horgan, CEO of Centamin: LSE- and TSX-listed gold miner Centamin is a major player in the Egyptian gold mining industry and operates the Sukari mine in the Eastern desert — the country’s largest.

We sat down with CEO Martin Horgan (LinkedIn) to discuss the company’s plans inside and outside of Egypt, the prospects for Egypt’s mining sector, as well as what’s on the horizon for gold markets. Our conversation with Horgan took place in the run-up to the two-day Egypt Mining Forum that kicks off on Tuesday, where Horgan, along with other industry heavyweights and government officials, will be taking to the stage.

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Enterprise: After announcing encouraging results from Centamin’s exploration in the Eastern desert, what are your plans to develop and broaden your business in the coming years?

Martin Horgan: We’re developing our business in two areas. First, we have the Sukari gold mine itself, which we operate in a joint venture with the Egyptian state. And then we have exploration around our new licenses — not so new anymore, two years down the line — which are issued under the new mining regime, which is hopefully due for approval in the coming weeks.

At Sukari, we're continuing to focus on our investment there to optimize and increase gold production, extend the mine’s life, and ensure that we do so at as low a cost of production as possible. One of the great facets of the Sukari gold mine is that we're in an economic partnership with the government. Every USD of profit that comes out of that mine is split 50-50 between Centamin as the operator and foreign direct investor and the state. And really importantly, of course, we sell the gold in USD, and therefore we're contributing USD to the Egyptian economy.

We also have our exploration ground. This is a fairly new initiative, but we believe there is very good potential geologically for Egypt to host more mining projects.

More internationally, one of the areas we’re looking at is Saudi Arabia. We see a similar journey there in terms of a change in economic, fiscal, and regulatory regime, and are really trying to encourage the kickstarting of the sector there. Geologically, Egypt and Saudi Arabia are basically the same package of rocks, so we believe our 20 years of experience operating in Egypt will be incredibly useful as we look to potentially work in Saudi. We also have projects in West Africa, but at the moment, Egypt is our home.

E: What are Centamin’s plans to increase gold production in Egypt itself?

MH: So, we've just been through what was effectively a full re-evaluation of the Sukari mine. It's been producing since 2009, so as we head into its fifteenth year of production, we see at least another decade of production ahead of us. Sukari genuinely is a world class asset, given its quality and scale.

Right now, we are focusing on extending the mine’s life. Can we find more gold within our mining concession? Can we mine that at an increased rate? I think the key area is making sure that we do so at the lowest possible cost so that we can really generate cash flow.

E: What are we looking at in terms of the size of new investments, both in exploration and other areas?

MH: Within Sukari itself, there are a number of programs. We built a 36 megawatt solar plant about 18 months ago and we're currently evaluating our ability to extend that solar farm — on the order of USD 15-20 mn. Another thing we're looking at now is a connection to the national power grid generation system, on the order of USD 50 mn in expenditures. We're also looking at adding some technology to the back-end of our processing facility on the order of USD 10-15 mn.

In the exploration block, at this stage we're talking on the order of USD 5-10 mn. If that starts to be successful, then that could very quickly become USD 50-100 mn of evaluation work for both drilling and technical studies. If we were to be successful and find a standalone mine, that could be on the order of USD 500 mn-plus in capital expenditures.

E: Does Centamin have plans to participate in upcoming tenders for gold exploration?

MH: Yes, certainly. We're always very interested to see where we can grow our portfolio within Egypt. After being awarded our blocks from the last tender and that exploration cycle coming to its natural conclusion, we will have the human resources and funding to start looking at new areas.

E: In terms of mining operations themselves, what sort of challenges does Centamin face, and how do you plan to improve the efficiency of your operations in Egypt and elsewhere?

MH: Egypt is, in a sense, a relatively immature mining sector. In a more mature mining jurisdiction, you tend to find multiple service providers, be that for equipment, consulting services, and so on. With us being the only significant gold producer in Egypt, you don't have that same depth of support that you would get in a more established jurisdiction.

Having said that, what Egypt does benefit from significantly is a deep pool of human capital and good infrastructure. On the human capital side, we see a number of high quality candidates coming out of various walks of life, so while these people might not have specific mining expertise, we're able to train them very quickly.

E: Turning to the gold market itself, what are your expectations for gold prices in the coming years? And what risks does Centamin face from the fluctuation in these prices?

MH: I always love this question — and it's impossible to answer. Gold in one sense is a currency, in another sense is a hedge against geopolitical risk, and gold also has a use for fabrication in jewelry — so there are a lot of different drivers of gold prices.

The best thing that we can do is make sure that we are as low-cost a producer as possible and really focus on our bottom line. When we see gold prices are high, we should be making good returns. When we see that gold prices are low, we can continue operating and still generate good cashflow because we're in the lower half of the cost curve.

Having said that, I do think that the macro outlook today is broadly supportive of the gold price. I don't think we're going to see gold retreat back to the levels of a decade ago. The macro outlook feels supportive in the short term, and the longer it stays at these prices, the more they get locked in.

E: How have rising production costs affected Centamin’s bottom line?

MH: The macro-inflationary period from around 2022 through to the end of 2023 affected everything from steel to consumables to fuel. I think the mining industry is in part a funder of that inflation, but also suffers from that inflation as well.

I'm delighted to say that despite that macro-inflationary environment, we've actually been able to reduce our costs. Back in 2022, our costs topped out at nearly USD 1.4-1.5k per oz, and last year we got that down to just about 1.2k per oz — we've been able to deliver in excess of 20% in cost savings in that inflationary environment.

E: In terms of government regulation and incentives, what kinds of incentives would you like to see Egypt offer in order to attract more investors?

MH: We believe that the reset mining regime that's being implemented right now is a key catalyst for foreign companies to come in, and as the established mining company in the country, we see it as our role to help lead that foreign direct investment into Egypt. There's a great road, power, and port network, there’s a fantastic wealth of human capital in terms of quality, and we think with this new code, there's real potential for Egypt to take off and start to have significant mining sector development over the coming decade.

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